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Advertising and Quantitative Analysis: The Trial and Error Economy Comes to Madison Avenue
By Bill Conerly, Businomics, Conerly Consulting LLC

The New York Times has an article about quantitative analysis coming to the advertising industry.  In the old days, ad agencies labored for months to create the perfect ad–perfect being totally subjective.  They only had the vaguest idea of whether an ad sold products.  Maybe the cute VW commercials helped bug sales, or maybe the stunning Apple ad help sell Macs–but maybe customer buzz drove sales and the ads were basically worthless.  Philadelphia’s department store baron John Wanamaker said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

Now advertisers have embraced the Trial and Error Economy.  It began with Google’s AdSense campaigns.  Savvy advertisers would create two different ads, then test one against the other in terms of results.  The revolution was not the two-ad test, but the ability to use analytics to tell which ad was better.  First you looked at how many ads were being clicked on.  Second, you looked at how many of these who went to your web site actually bought a product.  After you determined which ad was better, you discarded the poor ad and created a new ad to test against the better ad.  You kept tweaking ads, looking for better and better results.  Now the top dogs in AdSense are pretty good, indeed, at using actual trial and error methods to improve their advertising.  Madison Avenue: get with the program.